Great Customer Experience In Banking Can Be Worth Millions -- Forrester

Good customer service is the most highly valued attribute at both direct banks and multi-channel banks, according to a survey by Forrester Research of more than 110,000 consumers.

“A lot of the research Forrester does actually shows that customer experience leaders are growing revenue at a much faster rate than their peers,” said Alyson Clarke, principal analyst and a co-author of the report "The US Banking Customer Experience Index, 2018 -- How US Banks Earn Loyalty With The Quality Of Their Experience."

A change in customer experience ratings for a multichannel bank leaves $124 million on the table for every 1-point decline in its CX Index score, Forrester's Customer Experience Index said. Some of the results may surprise bankers and cause them to shift priorities, she added.

“At multi-channel banks, the chart shows that customer service and respect for the customer are the top two values, not communications , the web site or the mobile app,” said Clarke. But while the chart shows respect ranks second from the top for customers, those customers rank banks’ performance in showing respect as second from the bottom. Communication is the least important category; most banks communicate well on such basic information as what customers have in their accounts. Where they fall down is the next step — helping customers do something with that information.

Digital banking apps let customer move money and pay bills, experiences Clarke described as pretty clinical. The leading firms, such as Navy Federal Credit Union and USAA engage with customers to help them define and meet their financial goals.

Attendees enjoy the USAA Lounge during BaseFEST Powered by USAA in Jacksonville, Florida. (Photo by Gerardo Mora/Getty Images for USAA)

“Most banks offer me a checking account and savings, while most people think of the money in terms of a bucket for rent, savings for a holiday or other goals.”

Only in New Zealand has she seen a bank that offers buckets into which she can move her money and name the purpose, such as Whistler for a skiing vacation. (Simple and Moven in the U.S. offer similar features but they were too small to appear in this survey.)

“I can keep adding accounts and name them what I like and put an image on the account. Then when I interact am looking at it my account the way I want to look at it.” From the bank's point of view it is a checking account with some tagging that breaks the funds into categories for customer viewing...not exactly rocket science, but perhaps beyond the reach of 40-year old mainframe systems.

Clarke cited BBVA in Spain which has a new offering called Bconomy. It lets a customer set goals, save toward them and track progress, and also offers ideas on way to save money through price comparisons in purchases such as electricity.

“They look at different aspects of your finances and they actually turn around and make personalized recommendations based on your goals. In three weeks they had 500,000 customers."

In the U.S., USAA and Navy Federal both have cross functional teams to provide service the way customers see finance, not by account or product the way bankers tend to see their business.

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USAA has a team that helps people find the right house, not just get them into a mortgage. The bank uses referrals to help customers — it doesn’t try to own the whole value chain, but it finds real estate agents who understand military lives with their frequent moves and can recommend movers. At Navy Fed, every employee, including janitors, is on a bonus scheme where one-third of the value depends on customer satisfaction.

Navy Federal and USAA have an edge in their strong military ties, but some civilian banks do well too. Forrester cites Huntington National where its “Fair Play” bank philosophy “is designed to help attract and retain customers through transparency and a commitment to doing the right thing. Initiatives include overdraft protection transfers; ‘Asterisk-Free Checking’; and '24-Hour Grace,’ which helps customers avoid overdraft fees by establishing a positive balance the next business day.”

One sign of caring for customers is communicating the way they prefer. Navy Federal measures call center staff on customer satisfaction, not on how short they can make a call. Ally provides online chat at all times and shows the waiting time for its telephone contact center on its web site.

As part of its effort to deliver great customer experiences USAA launched a new design center in Austin, TX and is training people across the organization in human centered design and design thinking.

Forrester recommends that financial firms craft a customer experience (CX) vision that aligns with their brand.

"When you have a good grasp of your level of effort and timeline, you’ll come face to face with the gritty details of something you no doubt suspected: Your CX transformation will be a huge commitment for your company. How can you estimate the economic benefits of your transformation? What will achieving those benefits cost? In the end, will

the transformation be worth it? We’ve found very few organizations that know how to answer those questions in a systematic, repeatable, highly defensible way. If you want or need help in running the numbers for your company, read The ROI Of CX Transformation.

Customer experience has become a hot topic. In The Finanser this week, Chris Skinner describes some of the new banks in Europe. His description of Monzo sounds like Clarke’s suggestion that banks need to do more than offer balance information.

“Monzo tells “you exactly where you used your card via Google maps, so you can see the store location. It tells you the categorization of that spend – groceries, travel, clothes or whatever – and it allows you to easily share and split bills with friends through the app.”

Monzo monitors lifestyles and can tell customer who spends on the underground how they could save with an annual pass, and then will advance the money for it. Monzo even had a recent blog post about money and mental health. Skinner provides a good excerpt —the full post is here.

Monzo even has someone who is Head of Financial Difficulties to help.

American Banker’s Nathan DiCamillo reported from CB Insights’ Future of Finance conference in New York on what fintech executives told bankers they were doing wrong, from exorbitant fees in brokerages to harmful credit card policies.

Harit Talwar, head of Marcus at Goldman Sachs said people’s relationships with money is broken, Financial firms are forcing individual customers to be the aggregators of their finances instead of helping them. Both Marcus and Wealthfront plan to offer more extensive financial services to their users.

I like the pace of technology, especially in finance where it can move so fast. I'm on Jay Palter's list of fintech influencers to follow in 2018, although it takes a bit of scrolling: http://jaypalter.ca/2018/01/2018-fintech-influencers. In addition to Forbes I write for th...